Poverty and Income

The Great Recession came to its official end in 2009, but its damage will be with us for a long time. For three decades or more, inequality had been rising. Incomes for the top 1 percent grew 241 percent from 1979 to 2007; for the middle fifth, income grew 19 percent during this period; for the bottom fifth, only 11 percent. Even more than income, wealth has become concentrated in fewer hands. In 2010, the ratio of wealth for the top 1 percent as compared to the median household was 288 to 1, up from 125 to 1 fifty years before. While losses overtook all economic groups in the Great Recession, those at the top rebounded quickly. The richest 1 percent gobbled up 93 percent of all income gains in 2010, and continued to gain at the expense of everyone else in 2011. The rising tide mostly lifted the yachts.

The losses of the recession, worsening the long-term trends, have left most Americans far less secure. For the middle class, home values and retirement nest eggs plummeted. Median net worth fell nearly 39 percent from 2007 to 2010. Unemployment peaked at over 10 percent during the recession, and has slowly declined to under 8 percent. Millions of jobs have been created since the depths of the recession, but people who lost jobs found it much harder to return to the labor force, and when they did, it was frequently for less pay and fewer benefits. Now, more than four in ten of the unemployed have been out of work for more than six months; before the recession, only about one in six had been jobless so long.

Less work meant more poverty. Between 2007 and 2011, nearly 9 million more people fell under the official poverty line; the number of poor children grew by 2.8 million. Glaring racial disparities persist: in 2011 just under 10 percent of non-Hispanic whites were poor, but over one-quarter of African Americans and Hispanics lived in poverty.

Government kept this sobering situation from being even worse. Economic recovery measures created an estimated 2.7 million jobs. An increase in food stamps kept food on the table for millions, despite rising poverty. Unemployment Insurance and low-income tax credits lifted millions out of poverty. These essential steps show us government actions can avert economic catastrophe. But they did not do enough.

Tremendous wealth in few hands contributed to the economic collapse in 2007 and slows down our recovery now. When one-third of our nation lives in or too close to poverty, we buy less and produce less. Those with wealth amass political power to press for reduced taxes and disinvestment in much of what government does, including education, subsidized housing, scientific research and roads. Not every person of wealth wants a diminished federal role. But those who do have the resources to push hard for less health care, less nutrition assistance, and less help in times of need.